#Centurylink and lumen technologies free#

The recently announced rebranding is a clear message to the market, aimed at highlighting the profitable fiber businesses and, ultimately, at a re-rating of the company. Indeed, the company can sustain it for several years because it has now more refinancing possibilities than in the past. I've recently heard many arguments that Lumen will not be able to sustain the dividend, but this assertion has never been more wrong than today.

#Centurylink and lumen technologies free#

Since fourth-quarter 2018, also taking advantage of the low interest rate environment, Lumen was able to reduce the 2020 to 2025 debt maturities by $14 billion.įor the next four years, the amount of debt Lumen will have to pay yearly is (on average) approximately equal to the current free cash flow (after deducting dividend expenses). Indeed, here's how it is trying to make this evident (taken from the rebranding announcement): The company is already moving in the turnaround direction. Turn around the consumer business to make it more profitable (and attractive). Wait for the enterprise business to grow to a point where it can afford to dump the consumer business at any price. The answer is obvious that currently this is not the case, which leaves Lumen with two options: The most obvious questions are: How much can you sell a declining business for? Will that money be able to replace the missing revenues or, more precisely, to reduce interest expenses by a meaningful amount and compensate for the revenue loss? An internal review was conducted to determine the best option of monetizing this asset, but no announcement has been made since then. What should the company do with the consumer business? The simplest move would be selling it or spinning it off. He answered:Īs we can see, the consumer-related sales account for 25% (38% if we add the SMB) of total revenue. This is due to the strong association (especially in the U.S.) between the name 'CenturyLink' and that kind of business.įiber-based companies sell for much higher multiples, so if Lumen's revenue stream actually comes from different businesses (including the much more profitable fiber-based enterprise one) it would at least deserve a re-rating.ĭuring the most recent conference call, an analyst asked Storey why he thinks the market has this wrong perception.

This is absolutely true: if we look at the market multiples, Lumen is selling as if the whole company would still be in the old copper-lines telephone business. Jeffrey Storey, Lumen's CEO, has recently increasingly communicated the discomfort of seeing the company being valued by the market as a pure old-fashioned communication firm. What, then, is really new? It's the way Lumen hopes to be perceived by the market. The company has been working on those for several years. These topics are of course important and will be even more important in the next decade, but they aren't new. The announcement contains (as with any rebranding) a lot of shiny words and concepts, as leading the 4H Industrial Revolution, Adaptive Networking, Edge Cloud agility, etc. Warning! GuruFocus has detected 6 Warning Signs with LUMN. The word 'lumen' comes from Latin, meaning 'light,' which is a clear reference to the physical substrate of a fiber communication infrastructure.

14, CenturyLink announced it is rebranding as Lumen Technologies Inc.